National output could have grown by about 1.4 per cent in the last quarter of 1993, rather than the current estimate of 0.7 per cent, if the CSO adjusted the gross domestic product figures fully in line with the revisions to the trade data. This could help explain the pick-up in pay settlements and falls in unemployment seen late last year.
Confirmation of accelerating growth would exacerbate fears about inflation. Kenneth Clarke, the Chancellor, yesterday denied any rift with Eddie George, Governor of the Bank of England, saying he supported Mr George's recent warning to the Government against a short-term inflationary boom.
The CSO released figures showing substantial revisions to the pattern of Britain's trade performance through last year following a quality check on the new system introduced last year to measure EU trade flows. But City fears that the quality check might unearth up to pounds 5bn of previously under-recorded imports proved unfounded.
Taking last year as a whole, the changes were unspectacular. The CSO said exports to the EU were pounds 10m higher than it first thought and exports to the rest of the world pounds 78m lower. Imports from the EU were revised up by pounds 319m and from outside the EU down by pounds 130m. Last year's total trade deficit is now thought to be pounds 13.7bn, some pounds 257m worse than first estimated.
But the revisions to trade patterns through last year were more dramatic, although there are still doubts about how well the figures are adjusted for normal seasonal changes. Export volumes for the first nine months of last year have been revised down, but have been revised upwards sharply for the last three months. This suggests that total spending in the economy was weaker early last year than first thought, but much stronger as 1993 drew to a close.
John Marsland, economist at UBS, said the economy could have grown at an anaemic 0.3 per cent in the first two quarters of the year, accelerating to 0.9 per cent in the third quarter and 1.4 per cent in the fourth. He added that last year's import bill could still be dramatically underestimated. The official growth figures may not be adjusted, however, because exports are part of the measure of total national spending which is normally altered to be consistent with figures for national output of goods and services.
The figures also showed that the rise in export prices since the pound's devaluation was slightly smaller than first thought at about 12 per cent, while import prices have risen more dramatically than first thought at above 10 per cent. Import volumes have grown less sharply than first estimated.
The latest figures show that Britain's trade deficit in February was the lowest for six months at pounds 731m. The CSO said the deficit had been on a slowly shrinking trend since the turn of the year as imports fell slowly and exports remained static. Export and import volumes are both falling by about 0.5 per cent a month. The data helped strengthen the pound against other currencies.
The Chancellor told a press conference in Inverness that he agreed with the remarks by the Governor of the Bank to businessmen on Wednesday, in which he warned against short-term measures to boost growth. Mr Clarke said he wanted to get the message across that he would not allow 'short-term politics to give us a short-term boom that doesn't go on'.
'I agree with him. That was not an attack. I want a recovery that lasts,' Mr Clarke said. 'We are pursuing the same objectives.'
The Chancellor rejected as 'out of date' a warning by a European Commissioner, Henning Christophersen, that tax increases would stall the British economic recovery.
''I think he is out of date. I think it is plainly not the case that tax increases which are pretty well in place now are not seriously damaging consumer demand, and certainly not slowing up recovery. I stick to my forecast of 2.5 per cent GDP growth.'
Mr Clarke held out the prospect of further tax cuts 'as and when it is prudent to do so'.
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